Year Over Year Fourth Quarter Net Income
Improvement of $16.4 Million and Adjusted EBITDA Growth of 89%
Continued strong cash generation and debt paydown further
reduces net leverage Provides outlook and guidance for Q1
and full year 2024
Holley Inc. (NYSE: HLLY), a leader in automotive aftermarket
performance solutions, today announced financial results for its
fourth quarter and full year ended December 31, 2023.
Fourth Quarter Highlights vs. Prior
Year Period
- Net Sales increased 1.0% to $155.7 million compared to $154.2
million last year
- Gross Profit increased 27.5% to $60.3 million compared to $47.3
million last year, and gross margin was 38.7% compared to 30.7%
last year
- Net Income was $1.2 million, or $0.01 per diluted share,
compared to a Net Loss of $(15.2) million, or $(0.13) per diluted
share, last year
- Adjusted Net Loss1 was $(0.5) million compared to $(22.6)
million last year
- Adjusted EBITDA1 was $28.5 million compared to $15.1 million
last year
- Net Cash Provided by Operating Activities was $31.2 million
compared to $0.1 million last year
- Free Cash Flow1 was $29.9 million compared to $(1.3) million
last year
Full Year 2023 Highlights vs. Prior
Year Period
- Net Sales decreased 4.2% to $659.7 million compared to $688.4
million last year
- Gross Profit increased 1.0% to $256.1 million compared to
$253.7 million last year, and gross margin was 38.8% compared to
36.8% last year
- Net Income was $19.2 million, or $0.16 per diluted share,
compared to $73.8 million, or $0.14 per diluted share, last
year
- Adjusted Net Income1 was $25.0 million compared to $7.9 million
last year
- Adjusted EBITDA1 was $130.1 million compared to $114.7 million
last year
- Net Cash Provided by Operating Activities was $88.1 million
compared to $12.3 million last year
- Free Cash Flow1 was $83.6 million compared to $(0.4) million
last year
1See “Use and Reconciliation of Non-GAAP Financial Measures”
below.
"In 2023, Holley achieved many accomplishments as we focused on
fueling our teammates, supercharging our customers, and
accelerating profitable growth," said Matthew Stevenson, President
and Chief Executive Officer of Holley. "We are in the early stages
of an organizational transformation, and I am encouraged by the
progress we made in 2023 to position ourselves for long-term
success. We made significant strides in streamlining our
organization and directing our sales, marketing, and R&D
efforts towards high-impact areas. We have implemented new
processes designed to improve all key aspects of Holley's
operations, including a more targeted product development and
R&D approach, disciplined inventory and SKU management
processes, and a more informed innovation and product launch
pipeline. While these transformative efforts are still in their
early stages, they have already benefited our operational and
financial performance in 2023, and I am confident that this
positive momentum will continue as these programs gain
traction."
Key Operating Metrics and Strategic
Highlights
- Reduced past due orders sequentially by $4.8 million during the
fourth quarter, $17.9 million in 2023
- Reduced inventory sequentially by $13.7 million during the
fourth quarter, $40.1 million in 2023
- $5.0 million of year-over-year savings in the fourth quarter
and $35.6 million for the full year driven by operational
improvements and cost savings initiatives
- Completed additional $25 million in early debt paydown against
the Company’s first lien term loan facility in Q4
- Holley’s bank-adjusted EBITDA leverage ratio at quarter end of
4.21x was well below the amended covenant ceiling of 5.75x for Q4
of 2023 and below the original covenant level of 5.0x
- Record-setting attendance at consumer-focused Holley events in
2023, encompassing 7 multi-day festivals
- Implemented a new organizational design, including seven
distinct product category teams, to drive growth through expansion
of Holley’s portfolio of brands and products into additional
consumer verticals
Stevenson continued, "As we look to 2024, we will maintain our
focus on transforming Holley’s growth engine, despite a potentially
challenging macro-economic environment. We will put in the
fundamental talent, resources, and processes to unlock its full
potential. While we work on revving up Holley’s top-line growth
engine, we will also simultaneously work on improving our
distribution processes and cost to serve. We will also reduce
complexity in product offerings, optimize our cost structure, and
drive improved profitability.
Our operating model has exhibited increasingly strong cash flow,
and we are confident that we will continue paying down debt and
improving the company’s financial flexibility this year. Our
focused strategy, disciplined culture, and dedicated team will
guide us going forward as we drive toward our long-term financial
goals."
Holley's CFO, Jesse Weaver, said, "We anticipate a soft Q1 due
to the lower than expected out the door consumer demand experienced
by our resellers in late 2023 that led to high inventory levels at
key distribution partners. However, we are confident in the overall
strength of the automotive performance enthusiast aftermarket. We
think that our product and launch strategy will lead to growth in
the second half of the year and our actions to simplify and focus
the organization will support our long-term goal of delivering at
least 20% EBITDA margin.”
Outlook
Holley is providing the following outlook for the first quarter
and full-year 2024:
Metric
First Quarter 2024
Outlook
Full Year 2024 Outlook
Net Sales
$150 - $160 million
$640 - $680 million
Adjusted EBITDA
$27 - $33 million
$125 - $145 million
Capital Expenditures
$8 - $12 million
Depreciation and Amortization
Expense
$24 - $26 million
Interest Expense
$50 - $55 million
Bank-adjusted EBITDA Leverage
Ratio
4.0x - 3.5x
Conference Call
A conference call and audio webcast has been scheduled for 8:30
a.m. Eastern Time today to discuss these results. Investors,
analysts, and members of the media interested in listening to the
live presentation are encouraged to join a webcast of the call
available on the investor relations portion of the Company’s
website at investor.holley.com. For those that cannot join the
webcast, you can participate by dialing 877-407-4019 (Toll Free) or
201-689-8337 (Toll) using the access code of 13744257.
For those unable to participate, a telephone replay recording
will be available until Wednesday, March 6, 2024. To access the
replay, please call 877-660-6853 (Toll Free) or 201-612-7415 (Toll)
and enter confirmation code 13741890. A web-based archive of the
conference call will also be available on the Company’s
website.
Additional Financial
Information
The Investor Relations page of Holley’s website,
investor.holley.com contains a significant amount of financial
information about Holley, including our earnings presentation,
which can be found under Events & Presentations. Holley
encourages investors to visit this website regularly, as
information is updated, and new information is posted.
About Holley Inc.
Holley Inc. (NYSE: HLLY) is a leading designer, marketer, and
manufacturer of high-performance products for car and truck
enthusiasts. Holley offers a leading portfolio of iconic brands
that deliver innovation and inspiration to a large and diverse
community of millions of avid automotive enthusiasts who are
passionate about the performance and personalization of their
classic and modern cars. Holley has disrupted the performance
category by putting the enthusiast consumer first, developing
innovative new products, and building a robust M&A process that
has added meaningful scale and diversity to its platform. For more
information on Holley, visit https://www.holley.com.
Forward-Looking
Statements
Certain statements in this press release may be considered
“forward-looking statements” within the meaning of the “safe
harbor” provisions of the United States Private Securities
Litigation Reform Act of 1995. Forward-looking statements generally
relate to future events or Holley’s future financial or operating
performance. For example, projections of future revenue and
adjusted EBITDA and other metrics, along with statements regarding
the impact of organizational changes, are forward-looking
statements. In some cases, you can identify forward-looking
statements by terminology such as “may,” “should,” “expect,”
“intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,”
“or” or the negatives of these terms or variations of them or
similar terminology. Such forward-looking statements are subject to
risks, uncertainties, and other factors which could cause actual
results to differ materially from those expressed or implied by
such forward-looking statements. These forward-looking statements
are based upon estimates and assumptions that, while considered
reasonable by Holley and its management, are inherently uncertain.
Factors that may cause actual results to differ materially from
current expectations include, but are not limited to: 1) the
ability of Holley to grow and manage growth profitably which may be
affected by, among other things, competition; to maintain
relationships with customers and suppliers; and to retain its
management and key employees; 2) costs related to Holley being a
public company; 3) disruptions to Holley’s operations, including as
a result of cybersecurity incidents; 4) changes in applicable laws
or regulations; 5) the outcome of any legal proceedings that have
been or may be instituted against Holley; 6) general economic and
political conditions, including the current macroeconomic
environment, political tensions, and war (including the conflict in
Ukraine, the conflict in Israel and surrounding areas, and the
possible expansion of such conflicts and potential geopolitical
consequences); 7) the possibility that Holley may be adversely
affected by other economic, business, and/or competitive factors,
including recent events affecting the financial services industry
(such as the closures of certain regional banks); 8) Holley’s
estimates of its financial performance; 9) Holley’s ability to
anticipate and manage through disruptions and higher costs in
manufacturing, supply chain, logistical operations, and shortages
of certain company products in distribution channels; and 10) other
risks and uncertainties set forth in the section entitled “Risk
Factors” and “Cautionary Note Regarding Forward-Looking Statements”
in the Annual Report on Form 10-K for the year ended December 31,
2022 filed with the U.S. Securities and Exchange Commission (“SEC”)
on March 15, 2023, and/or disclosed in any subsequent filings with
the SEC. Although Holley believes the expectations reflected in the
forward-looking statements are reasonable, nothing in this press
release should be regarded as a representation by any person that
the forward-looking statements or projections set forth herein will
be achieved or that any of the contemplated results of such forward
looking statements or projections will be achieved. There may be
additional risks that Holley presently does not know or that Holley
currently believes are immaterial that could also cause actual
results to differ from those contained in the forward-looking
statements. You should not place undue reliance on forward-looking
statements, which speak only as of the date they are made. Holley
undertakes no duty to update these forward-looking statements,
except as otherwise required by law.
[Financial Tables to Follow]
HOLLEY INC. and
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
For the thirteen weeks
ended
For the year ended
December 31,
December 31,
Variance
Variance
December 31,
December 31,
Variance
Variance
2023
2022
($)
(%)
2023
2022
($)
(%)
Net Sales
$
155,707
$
154,165
$
1,542
1.0
%
$
659,704
$
688,415
$
(28,711
)
-4.2
%
Cost of Goods Sold
95,453
106,908
(11,455
)
-10.7
%
403,615
434,757
(31,142
)
-7.2
%
Gross Profit
60,254
47,257
12,997
27.5
%
256,089
253,658
2,431
1.0
%
Selling, General, and Administrative
32,246
48,196
(15,950
)
-33.1
%
120,244
150,728
(30,484
)
-20.2
%
Research and Development Costs
4,909
6,687
(1,778
)
-26.6
%
23,844
29,083
(5,239
)
-18.0
%
Amortization of Intangible Assets
3,517
3,698
(181
)
-4.9
%
14,557
14,683
(126
)
-0.9
%
Impairment of Indefinite-Lived Intangible
Assets
—
—
—
nm
—
2,395
(2,395
)
-100.0
%
Acquisition and Restructuring Costs
535
1,266
(731
)
-57.7
%
2,641
4,513
(1,872
)
-41.5
%
Other Operating Expense (Benefit)
257
920
(663
)
-72.1
%
765
1,514
(749
)
-49.5
%
Operating Expense
41,464
60,767
(19,303
)
-31.8
%
162,051
202,916
(40,865
)
-20.1
%
Operating Income (Loss)
18,790
(13,510
)
32,300
nm
94,038
50,742
43,296
85.3
%
Change in Fair Value of Warrant
Liability
(1,405
)
(5,909
)
4,504
-76.2
%
4,111
(57,021
)
61,132
nm
Change in Fair Value of Earn-Out
Liability
214
(1,449
)
1,663
nm
2,303
(10,731
)
13,034
nm
Gain on Early Extinguishment of Debt
(701
)
—
(701
)
nm
(701
)
—
(701
)
nm
Interest Expense, Net
18,837
13,447
5,390
40.1
%
60,746
40,227
20,519
51.0
%
Non-Operating Expense (Income)
16,945
6,089
10,856
178.3
%
66,459
(27,525
)
93,984
nm
Income (Loss) Before Income Taxes
1,845
(19,599
)
21,444
nm
27,579
78,267
(50,688
)
-64.8
%
Income Tax Expense (Benefit)
643
(4,373
)
5,016
nm
8,399
4,493
3,906
86.9
%
Net Income (Loss)
$
1,202
$
(15,226
)
$
16,428
nm
$
19,180
$
73,774
$
(54,594
)
-74.0
%
Comprehensive Income (Loss):
Foreign Currency Translation
Adjustment
337
(2,248
)
2,585
nm
234
(990
)
1,224
nm
Pension Liability Gain
—
302
(302
)
-100.0
%
—
302
(302
)
-100.0
%
Total Comprehensive Income
(Loss)
$
1,539
$
(17,172
)
$
18,711
nm
$
19,414
$
73,086
$
(53,672
)
-73.4
%
Common Share Data:
Basic Net Income (Loss) per Share
$
0.01
$
(0.13
)
$
0.14
nm
$
0.16
$
0.63
$
(0.47
)
-74.6
%
Diluted Net Income (Loss) per Share
$
0.01
$
(0.13
)
$
0.14
nm
$
0.16
$
0.14
$
0.02
14.3
%
Weighted Average Common Shares Outstanding
- Basic
117,707
117,148
559
0.5
%
117,379
116,763
616
0.5
%
Weighted Average Common Shares Outstanding
- Diluted
119,573
117,179
2,394
2.0
%
118,511
117,248
1,263
1.1
%
nm - not meaningful
HOLLEY INC. and
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEET
(In thousands)
(Unaudited)
As of
December 31,
December 31,
2023
2022
Assets
Total Current Assets
$
297,366
$
324,963
Property, Plant and Equipment, Net
47,206
52,181
Goodwill
419,056
418,121
Other Intangibles, Net
410,465
424,855
Other Noncurrent Assets
29,250
29,522
Total Assets
$
1,203,343
$
1,249,642
Liabilities and Stockholders’ Equity
Total Current Liabilities
$
92,847
$
101,259
Long-Term Debt, Net of Current Portion
577,600
643,563
Deferred Taxes
53,542
58,390
Other Noncurrent Liabilities
38,203
30,440
Total Liabilities
762,192
833,652
Common Stock
12
12
Additional Paid-In Capital
373,869
368,122
Accumulated Other Comprehensive Loss
(710
)
(944
)
Retained Earnings
67,980
48,800
Total Stockholders’ Equity
441,151
415,990
Total Liabilities and Stockholders’
Equity
$
1,203,343
$
1,249,642
HOLLEY INC. and
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the thirteen weeks
ended
For the year ended
December 31,
December 31,
December 31,
December 31,
2023
2022
2023
2022
Operating
Activities
Net Income (Loss)
$
1,202
$
(15,226
)
$
19,180
$
73,774
Adjustments to Reconcile to Net Cash
14,625
17,465
44,071
(5,155
)
Changes in Operating Assets and
Liabilities
15,402
(2,091
)
24,841
(56,307
)
Net Cash Provided by Operating
Activities
31,229
148
88,092
12,312
Investing
Activities
Capital Expenditures, Net of
Dispositions
(1,328
)
(1,430
)
(4,453
)
(12,702
)
Acquisitions / Divestitures, net
—
1,742
—
(12,335
)
Net Cash Provided by (Used in) Investing
Activities
(1,328
)
312
(4,453
)
(25,037
)
Financing
Activities
Net Change in Debt
(25,601
)
8,307
(66,038
)
3,517
Deferred financing fees
—
—
(1,427
)
—
Payments from Stock-Based Award
Activities
(409
)
—
(1,543
)
(1,050
)
Proceeds from Issuance of Common Stock Due
to Exercise of Warrants
—
—
—
383
Net Cash Provided by (Used in) Financing
Activities
(26,010
)
8,307
(69,008
)
2,850
Effect of Foreign Currency Rate
Fluctuations on Cash
357
777
300
(300
)
Net Change in Cash and Cash
Equivalents
4,248
9,544
14,931
(10,175
)
Cash and Cash
Equivalents
Beginning of Period
36,833
16,606
26,150
36,325
End of Period
$
41,081
$
26,150
$
41,081
$
26,150
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net
Income, and Free Cash Flow are not prepared in accordance with
accounting principles generally accepted in the United States
(“GAAP”) and may be different from non-GAAP and other financial
measures used by other companies. These measures should not be
considered as measures of financial performance under GAAP, and the
items excluded from or included in these metrics are significant
components in understanding and assessing Holley’s financial
performance. These metrics should not be considered as alternatives
to net income, net cash provided by operating activities, or any
other performance measures, as applicable, derived in accordance
with GAAP.
Holley believes EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin,
Adjusted Net Income, and Free Cash Flow are useful to investors in
evaluating the Company’s financial performance and in comparing the
Company’s financial results between periods because they exclude
the impact of certain items that we do not consider indicative of
our ongoing operating performance. In addition, Holley uses these
measures internally to establish forecasts, budgets, and
operational goals to manage and monitor its business. Holley
believes that these non-GAAP and other financial measures help to
depict a more realistic representation of the performance of the
underlying business, enabling Holley to evaluate and plan more
effectively for the future.
HOLLEY INC. and
SUBSIDIARIES
USE AND RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)
For the thirteen weeks
ended
For the year ended
December 31,
December 31,
December 31,
December 31,
2023
2022
2023
2022
Net Income (Loss)
$
1,202
$
(15,226
)
$
19,180
$
73,774
Adjustments:
Interest Expense, Net
18,837
13,447
60,746
40,227
Income Tax Expense (Benefit)
643
(4,373
)
8,399
4,493
Depreciation
2,570
2,607
10,308
10,107
Amortization
3,517
3,698
14,557
14,683
EBITDA
26,769
153
113,190
143,284
Acquisition and Restructuring Costs
535
1,266
2,641
4,513
Change in Fair Value of Warrant
Liability
(1,405
)
(5,909
)
4,111
(57,021
)
Change in Fair Value of Earn-Out
Liability
214
(1,449
)
2,303
(10,731
)
Equity-Based Compensation Expense
2,121
14,877
7,291
24,395
Product Rationalization
—
4,519
(800
)
4,519
Impairment of Indefinite-Lived Intangible
Assets
—
—
—
2,395
Gain on Early Extinguishment of Debt
(701
)
—
(701
)
—
Notable Items
721
741
1,285
1,838
Other Expense
257
920
765
1,514
Adjusted EBITDA
$
28,511
$
15,118
$
130,085
$
114,706
Total Revenues
$
155,707
$
154,165
$
659,704
$
688,415
Net Income Margin
0.8
%
-9.9
%
2.9
%
10.7
%
Adjusted EBITDA Margin
18.3
%
9.8
%
19.7
%
16.7
%
For the thirteen weeks
ended
For the year ended
December 31,
December 31,
December 31,
December 31,
2023
2022
2023
2022
Net Income (Loss)
$
1,202
$
(15,226
)
$
19,180
$
73,774
Special items:
Adjust for: Change in Fair Value of
Warrant Liability
(1,405
)
(5,909
)
4,111
(57,021
)
Adjust for: Change in Fair Value of
Earn-Out Liability
214
(1,449
)
2,303
(10,731
)
Adjust for: Gain on Early Extinguishment
of Debt
(554
)
—
(554
)
—
Adjust for: Impairment of Indefinite-Lived
Intangible Assets
—
—
—
1,892
Adjusted Net Income (Loss)
$
(543
)
$
(22,584
)
$
25,040
$
7,914
For the thirteen weeks
ended
For the year ended
December 31,
December 31,
December 31,
December 31,
2023
2022
2023
2022
Net Cash Provided by Operating
Activities
$
31,229
$
148
$
88,092
$
12,312
Capital Expenditures, Net of
Dispositions
(1,328
)
(1,430
)
(4,453
)
(12,702
)
Free Cash Flow
$
29,901
$
(1,282
)
$
83,639
$
(390
)
First Quarter 2024
Outlook
Full Year 2024 Outlook
Low Range
High Range
Low Range
High Range
Net Sales
$
150,000
$
160,000
$
640,000
$
680,000
Adjusted EBITDA
27,000
33,000
125,000
145,000
Depreciation and Amortization
24,000
26,000
Interest Expense
50,000
55,000
Capital Expenditures
8,000
12,000
Bank-adjusted EBITDA Leverage Ratio
4.0x
3.5x
Holley defines EBITDA as earnings before depreciation,
amortization of intangible assets, interest expense, and income tax
expense. Holley defines Adjusted EBITDA as EBITDA adjusted to
exclude, to the extent applicable, acquisition and restructuring
costs, which includes transaction fees and expenses, termination
related benefits, facilities relocation, and executive transition
costs; changes in the fair value of the warrant liability; changes
in the fair value of the earn-out liability; equity-based
compensation expense; impairment of intangible assets; gain or loss
on the early extinguishment of debt; non-cash charges due to a
product rationalization initiative aimed at eliminating
unprofitable or slow-moving stock keeping units, for which a
partial reversal of the initial reserve was recognized during the
year ended December 31, 2023; notable items that we do not believe
are reflective of our underlying operating performance, which for
the year ended December 31, 2023, includes certain costs incurred
for advisory services related to identifying performance
initiatives, and for the year ended December 31, 2022, includes a
non-cash adjustment related to the adoption of ASC Topic 842,
“Leases,” and legal fees and costs related to a settlement; and
other expenses or gains, which includes gains or losses from
disposal of fixed assets, franchise taxes, and gains or losses from
foreign currency transactions. Adjusted EBITDA Margin is calculated
as Adjusted EBITDA divided by total revenues.
Holley calculates Adjusted Net Income by excluding the after-tax
effect of items considered by management to be special items from
the earnings reported under U.S. GAAP. Management uses this measure
to focus on on-going operations and believes that it is useful to
investors because it enables them to perform meaningful comparisons
of past and present consolidated operating results. Holley believes
that using this information, along with net income, provides for a
more complete analysis of the results of operations.
Holley defines Free Cash Flow as net cash provided by operating
activities minus cash payments for capital expenditures, net of
dispositions. Management believes providing Free Cash Flow is
useful for investors to understand the Company's performance and
results of cash generation after making capital investments
required to support ongoing business operations.
A forecast for first quarter and full year 2024 Adjusted EBITDA
and a forecast for full year 2024 Year-end Bank-adjusted EBITDA
Leverage Ratio is provided on a non-GAAP basis only because certain
information necessary to calculate the most comparable GAAP
measure, net income, is unavailable due to the uncertainty and
inherent difficulty of predicting the occurrence and the future
financial statement impact of certain items. Therefore, as a result
of the uncertainty and variability of the nature and amount of
future adjustments, which could be significant, Holley is unable to
provide a reconciliation of its forecasted 2024 Adjusted EBITDA and
Bank-adjusted EBITDA Leverage Ratio without unreasonable
effort.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240228771317/en/
Investor Relations: Ross Collins / Stephen Poe Alpha IR
Group 312-445-2870 HLLY@alpha-ir.com Media Relations: Paul
Oakley, poakley@tinymightyco.com / Rachel Withers,
rwithers@tinymightyco.com Tiny Mighty Communications
615-454-2913
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